Making Charitable Gifts and Paying Taxes
The Christmas festive session is traditionally the time for charitable giving, when many of us recognise the need to ensure that the hungry can enjoy a Christmas dinner and that Father Christmas can bring presents on Christmas morning for kiddies who would otherwise go without.
We should all give thanks for the efforts of those – like the Salvation Army and the City Missions – who think of others in this season of goodwill and who depend on donations from the public for the excellent work they do. The charitable impulse should never be under-valued; we are all better off as a society for the generosity of caring people.
But we should also recognise the limitations of private charity. Giving and receiving is of value to both donors and recipients and has its own special and irreplaceable part to play; and there are of course those major benefactions from very wealthy people which fund valuable undertakings that would not otherwise get off the ground.
Charitable giving, though, is not – as is sometimes suggested – an alternative to funding from the public purse; it cannot possibly meet the funding needs of major services like health care, education, income support and public housing. The sums raised are just too small and are too uncertain and unfocused to enable the planning and organisation that are required to guarantee basic standards in essential services – not just for the needy but for all of us – across such a wide front and over such a long period.
If the public services on which so many in a civilised society now depend are to be properly funded, that funding has to be raised by a means that is much more systematic than that offered by sausage sizzles or rattling a collection box or random cold calling. The voluntary sector does much valuable work and needs constant support but cannot be expected to bear the whole burden.
If we are truly concerned for the welfare of our fellow-citizens, and not just at Christmas time, we need to be sure that the funds are there to provide for the necessities of life; and we need to recognise that there is only one completely reliable source of those essential funds, and that is us – each one of us – and there is only way for us to be sure that those funds are systematically made available, and that is through paying our taxes.
It simply does not make sense on the one hand to object to or resent paying taxes, and to seek to avoid doing so, and on the other, to try to salve our consciences by making occasional charitable donations. We may succeed in fooling ourselves that we are doing our bit through such attitudes, but those responsible for delivering public services and investing in our economic infrastructure know better.
The good and kind heart that is evidenced as we donate to good causes should also manifest itself as we pay our taxes. A charitable impulse is of course highly commendable, but even more commendable is that sense of social responsibility and solidarity that leads us to pay our taxes willingly and supportively.
This simple message is of course not directed just to individuals. It is even more pointed and pertinent when addressed to major (and often international) corporations, many of whom seem to spend a great deal of time and energy in avoiding their obligations to pay taxes on the huge profits they make. We should never forget that, behind the facade, the veil of incorporation, of each of these corporations, stand individuals, often very wealthy individual shareholders, who become even wealthier by avoiding the tax that they and their companies should be paying.
The Christmas message should be clear. Many of us will make generous gifts to help those less well-off than ourselves and to allow small children to enjoy to the full a valuable part of their childhood. But if we are serious and genuine about wishing to help those in need to enjoy Christmas, we should recognise our responsibility tp ensure that our society as a whole makes proper provision to meet the needs of all of our fellow citizens – not just at Christmas but throughout the year.
Bryan Gould
4 December 2018
Who Caused the Problems in the First Place?
The Guardian published a few days ago an article by Peter Mandelson, someone I might once have described as an “old friend and colleague” but for whom the term “former” is probably more accurate.
In the article, Mandelson rehearses at some length and with considerable relish what he sees as the obstacles to an acceptable Brexit deal. His theme is the admonition of those who voted for Brexit and who are, as he sees it, foolish enough to think that we can extricate ourselves painlessly from our entanglement with the European Union.
What is remarkable about the article is that there is not a hint of any apology from him or acceptance of any responsibility on his part for this dilemma. There is no recognition of the simple fact that it is those like Mandelson who urged us on in the first place and led to our being embroiled in an arrangement which, as I and others warned at the time, was contrary to our interests and from which it is proving so difficult to free ourselves.
In the early 1970s, after I had spent some years in the Foreign Office and in our Brussels Embassy working on the UK’s relationship with what was then the Common Market, I had seen enough to convince me that the arrangement we apparently wished to join was totally inimical to our interests.
It would require us to support as taxpayers (and at considerable cost), the Common Agricultural policy, and to pay higher food prices as consumers – turning our backs on our well-established trade links with the most efficient and cost-effective producers of food and raw materials in the world, and thereby forsaking as a result our main cost advantage as a manufacturing economy – lower food costs than those of our European rivals.
In addition, we would lose the preferential markets for our manufactured goods offered by those same trading partners and would face instead direct competition with efficient German manufacturing in our own and European markets. It was hard to imagine any other voluntary change that would have – with absolute predictability – placed us at such a disadvantage.
Those warnings were pooh-poohed at the time by Mandelson and his ilk but have been amply borne out by our actual experience. No one who reviews Britain’s history as a manufacturing economy since we joined the Common Market can doubt or dispute the damage we did to ourselves, or the plight we find ourselves in, with our manufacturing capability now diminished and weakened almost beyond repair.
And none of this is to say anything of other penalties we have had to suffer, such as those imposed by the Common Fisheries Policy. The referendum result is the definitive verdict on the whole of that experience.
We were constantly advised by Mandelson and his friends that we should not concern ourselves with minor matters like paying our way in the world but should instead focus on the great virtues of the European ideal – but when the question was asked as to whether that European ideal included the creation of a European super-state, we were solemnly assured that no such thought was in anyone’s mind.
We now know, decades later, that the European Union has pretensions to many of the powers of a sovereign state and that it is precisely the recovery of those powers, and the difficulty we have in reclaiming them, that underlies the problems in securing Brexit. It is a safe assumption that much of the case for Brexit, as voted for by the referendum majority, was based on the sense that the re-assertion of British sovereignty and self-government was long overdue.
But, not a word from Mandelson and his friends about these matters – and no recognition that it is precisely the cession of sovereign powers to Brussels – and their part in advising us to take that fateful step – that makes the divorce so difficult.
To recall and register these undeniable truths is, sadly, not to ease in any way the solution to these longstanding problems; but it might, and should, at least relieve us of the burden of having to listen to (or read) lectures about how intractable are the problems thrown up by Brexit from those who bear such responsibility for them in the first place.
Bryan Gould
30 November 2018
Fads and Fashions in Economic Polcy
Fads and fashions in economic policy come and go; they invariably reflect the self-interest of those who propound them, and since the “haves” tend to have louder voices and more influence than the “have nots”, it is often the interests of the former that prevail when economic policy is formulated.
A couple of relatively recent examples will show what I mean. When the Global Financial Crisis struck, the response decided upon in many countries (and the UK in particular) was to tighten belts and slam on the brakes – such policies became known as “austerity”. The theory was, presumably, that governments had to steady the ship, and that they could not afford to go on spending when there was so much uncertainty.
But austerity, as a response to what threatened to be the worst recession for decades, was the very worst step that could have been taken. The great economist, John Maynard Keynes, had shown in the Great Depression that the only cure was to spend more, not less – that a depression or recession occurred because there was not enough demand (or, in other words, spending power) and that the proper remedy was to inject more money into an economy that was about to close up shop altogether.
The lessons learnt in the 1930s counted for little, however, when faced with the prejudices of those who decide these matters. For the holders of assets, there were two drivers – they wanted the value of those assets maintained, and they wanted to be sure that if anyone had to pay a price to put things right, it would not be them.
As a result, governments found large sums of money (usually by printing it – the polite term was “qualitative easing”) but they used that money not to boost economic activity, but to shore up the banks, with the result that the value of financial assets was boosted. At the same time, they cut spending; the spending cuts bore heavily on the poor, weakening the public services on which they depended, such as health and education and housing, and holding wages and benefits down.
It is only now, after nearly a decade or more of such policies, that a consensus has begun to emerge, supported by agencies like the Word Bank and the IMF, that austerity was a mistake, and had done much unnecessary economic and social damage.
Another example was the fashionable theory that, as the rich grew richer, their good fortune would “trickle down” to make everyone better off. The theory was used to justify tax cuts for the rich and other policy initiatives designed to boost profits, and to allay concerns about the growing gap, in both wealth and income terms, between rich and poor.
Sadly, the theory was revealed to be no more than wishful thinking. The growing riches of the haves did not “trickle down” but were hoarded or used to buy income-producing capital assets (which had the effect of widening the income gap still further) or spent on various forms of conspicuous consumption.
The other side of the same coin has been the refusal to recognise that the economy is likely to benefit much more from an increase in the purchasing power of the poor than of the rich. Every extra dollar for the low-paid (as for the recent increase in the wages of hospital cleaners) will be spent and will lift the volume of sales, thereby benefiting profits.
The conventional wisdom, however, not only ignores the social benefits of lifting people out of poverty, but also chooses to see higher wages as simply an increased cost and therefore to be resisted. We need look no further for an explanation of the paradox that business confidence remains low although the economy is doing well.
There must be a suspicion that, sadly, for some people it is staying ahead that matters – maintaining their advantage over others is more important than simply doing well themselves.
It is time we – the voters – recognised that self-serving fads and fashions – not to say prejudices -are not a workable basis for a sensible economic policy. Doing what is right in social terms will often be the best economic policy as well.
Bryan Gould
27 November 2018
What is the Point of Education?
I have been involved with education, in one way or another, for most of my life. First as a schoolboy, then as a university student (in both New Zealand and England), a brief spell as a secondary school teacher, then as an Oxford law don and finally as a university Vice-Chancellor, I have seen education from a variety of different angles.
Not surprisingly, perhaps, I have from time to time asked myself the question – what is the point of education? Looked at from the viewpoint of the individual, the answer may seem straightforward enough; a good education may seem to be the key to a good job and a life of fulfilment. But what about the wider question – why should society invest in education and what do we expect to get out of it?
Again, the answer may seem comparatively simple. An educated population will, it is assumed, be more productive and will allow us all to enjoy a higher standard of living. But even this fails to capture, I believe, the real point.
Education is about more than equipping the individual to operate effectively as a unit of production. Yes, the economy is important, but we should hope and expect that an educated population will produce a greater range of benefits than just a statistical boost to the GDP figures.
An educated society will be one that is fully aware of who we are, where we have come from and what truly matters to us. We will understand our own history and the great riches and subtleties of our language and will take pleasure in using it properly. We will recognise the things we have in common and that bind us together. We will observe the rules that allow our society to function well, and we will reject those who invite us to ignore the principles that make for a good and well functioning society.
The first purpose of education is not, in other words, just the accumulation of knowledge – of facts and figures; it is to teach children that there is a world beyond the family. The school, as an institution, is as important as the teaching that happens there; it is a social environment where children learn that they are not the centre of the universe and that things go better for them if they learn to take account of the interests of others.
An educated person is more than someone who has passed exams and gained formal qualifications; and education is best delivered by teaching rather than constant testing. The pressure to obtain top grades – so often seen as the essence of education at school level – serves the interests of schools, not pupils.
There is a good deal of anxiety at present, right across the globe, at what is described as the rise of “illiberal” or “populist” democracy. Commentators lament the tendency of the democratic process to reflect the views of those who are assumed to know little and to vote in line with prejudices based on ignorance.
The classic instance of this phenomenon was, it is suggested, Donald Trump’s victory in the 2016 presidential election. Trump gained his support, so the argument runs, by persuading his “base” that they should not hold against him – on the ground that they did not really matter – his tendencies to lie, to defy normal moral standards, to disrespect women and racial and sexual minorities, to attack a free press and to pay little regard to the rule of law.
It is certainly true that an educated electorate would have paid more attention to these failings and would have recognised the threat they pose to a good and decent society. The price being paid by the US (and the world) for an electorate that has trouble in understanding the significance of, for example, the rule of law – the principle that even presidents are subject to the law – is hard to overstate.
The case for education is, it turns out, an easy one to make. Education equips our citizens to play a full part in developing a good society. If we want a properly functioning democracy, we need an electorate that has the understanding and abIlity to make good and informed judgments about important issues and to hold their elected representatives to account. A democracy works well, in other words, only with an educated electorate.
Bryan Gould
20 November 2018
Picking Up the Pieces
The news that the government is to find $80 million to repair Middlemore Hospital should come as no surprise. This is just the latest instance of the new government having to pick up the tab to make good something neglected by its predecessor.
It s not just a matter of restoring to an acceptable condition a single long neglected rotting and crumbling hospital. There are, in the health sector alone, other buildings with identical problems, and right across the public sector, wherever one looks, there is evidence of the spending now needed to remedy the failings and omissions of the last National government.
We are told, for example, that our drinking water is hardly safe to drink – a shocking state of affairs for a supposedly developed country – and that it needs substantial investment if it is to be brought up to standard – and that is to say nothing of the condition of our rivers and waterways. And there are other major parts of our essential infrastructure that are in similarly urgent need of attention and improvement.
The new government, we learn, has also been able to find the millions needed (but hitherto not made available) to step up the effort to save our native flora from kauri die-back and myrtle rust – problems that were barely addressed by the previous government who seem to have learnt little from the PSA debacle in the kiwifruit industry under their watch.
At the same time as these infrastructure and environmental issues are demanding attention, our schools are struggling to find enough qualified teachers, carrying an obvious threat to the standard of education enjoyed by our new generation; if that situation is to be remedied we need to find the resources to train the necessary recruits. And teaching is not the only occupation where we have neglected to look to the future; in the construction industry, we have failed to provide the apprenticeships that are needed, and business as a whole identifies the shortage of skilled workers as the greatest impediment to their progress.
In the public sector, we find that even those who have been trained and are currently working, especially in essential occupations – teachers, nurses, midwives, court staff, civil servants more generally, and many others – have seen their salaries fall in real and comparative terms, all victims of the drive to cut costs by a government giving priority to “producing a surplus”. The current rash of strikes is a direct result of earlier neglect and irresponsibility by those holding the purse strings.
When spending is cut in this way for ideological purposes, the consequences are all too predictable. The standards we expect in our public administration (and for which New Zealand is renowned worldwide) begin to slip and we find that we can no longer rely on public agencies to do their jobs properly. These consequences are not limited to the big-ticket items, such as health care and education. So, for example, inspections of articulated vehicles are not properly carried out so that potentially dangerous vehicles are let loose on our roads, and warrants of fitness are issued without any real inspection, with possibly fatal consequences for some drivers.
Services starved of resources become vulnerable to cutting corners, turning blind eyes, and accepting inducements for doing so, so that even our hard-earned reputation as the least corrupt society in the world is placed at risk.
We have done ourselves an enormous injury in allowing cost-cutting to take priority over maintaining reliably high standards. And, sadly, by the time the day of reckoning has arrived, those responsible have long gone and it is left to others to carry the can.
It is the successors to the “cut at all costs” brigade who must pick up the tab for past neglect. They have the task of somehow finding the resources that are needed – and they must endure the complaints of those who, in the aftermath of the cuts, now find themselves under-paid and under-resourced, and – in some cases – not employed at all.
There is of course a lesson to be learned from this sad saga. It is that a government that is hostile to the public sector and to public spending can do enormous damage to our economy and to our country as a whole. Voters, however, are often surprisingly reluctant to cut any slack for a successor government that tries to pick up the pieces and put them together again.
Bryan Gould
22 November 2018